Governor Schwarzenegger signed a bill today putting a $15 billion bond measure on the March ballot.
I’ll be voting a big fat NO on that proposition. And if you live in California, I strongly encourage you to do the same.
Why? It’s quite simple.
1. I’ve been voting in California elections since 1989, and every single year there are tens of billions in bond issues on the ballot. This state now has:
- $65 billion of general obligation and lease-revenue bond debt
- $17.7 billion in energy bond debt
- $4.6 billion in tobacco bond debt
- $12.5 billion in short-term Revenue Anticipation Notes
- $11 billion in short-term Registered Reimbursement Warrants (RAWs)
That’s a grand total of $110.8 billion. Now they want to add $15 billion more? I don’t think so.
2. California’s bond rating is abysmal. Moody’s downgraded the state to Baa1. That’s three steps above “junk” level. It’s the lowest rating of any state in the union. That means bonds must be offered with higher interest rates. Guess who pays the high interest rates? You do. And if the bond rating ever reaches junk level, you’ll really see a disaster. At “junk” level, institutional investors can no longer buy them and most individual investors won’t want to.
3. State spending has been completely irresponsible. The budget for 2002-2003 is $100 billion. That’s a 44% increase in just four years. According to the Public Policy Institute of California:
California’s budget has grown by 44 percent since FY 1997-98 due largely to increasing income tax revenues (specifically, receipts from stock options and capital gains). Revenues from stock options and capital gains peaked in FY 2000-01 at $17.6 billion and accounted for 25 percent of general fund revenues. The following year, half as much revenue was raised from these sources, with the state receiving an estimated $8.6 billion in revenues. These revenues are not expected to return to peak levels in the foreseeable future.
A pretty good case so far, eh? But I haven’t even touched on the real problem yet. The primary reason spending doesn’t get cut is that all the big ticket items are sacred cows. No one in Sacramento has the cajones to even suggest touching them. On a Federal level the budget buster is social spending–Medicare and Social Security. Here in California, it’s education.
No one will ever entertain the idea of cutting education because it’s so ripe for political exploitation as “selling our kids down the river”. Please. With all due respect, $126 billion in debt is financial slavery. And that’s exactly what the next generation will be saddled with. At a minimum.
Let’s look at education spending. The California Budget Project has a concise Excel spreadsheet that shows 44% of the budget is spent on K-12 education and another 14% goes toward the UC and Cal State systems. That’s a grand total of 58% of the state budget spent on education!
The overall long term trend, both on a total dollar basis, per-student dollar basis, and percentage of the state budget basis, has been toward greater spending on education. So next time some one tells you we don’t spend enough on the schools, tell them that.
But enough with the numbers. I went to a college that turns out a lot of K-12 teachers. I sing with an educational outreach ensemble from the Pacific Chorale in schools all the time. Many of my friends are teachers. And I ask them all the same question: is the problem with public schools rooted in a lack of money?
They all answer the same way: no.
So what is the problem? Everyone tells me the same thing. First, teachers are too restricted in the classroom. Second, students are passed on to higher grades regardless of performance. That only puts them further behind and cements their failure. And finally, lack of parental involvement.
I am not anti-education. I attended California public school through the sixth grade and my grade school teachers were outstanding. There are infrastructure needs and the student population is growing. But education cuts should not be off-limits.
I don’t know what Schwarzenegger is thinking, but all cuts that have been proposed are in the wrong areas. For example, the governor has proposed cutting all new highway construction projects state-wide. Of all the things to cut! California sees 1,300 cars added to its highways every single day. The gridlock on the roads is already hurting the economy. The Santa Cruz Sentinel summarized it best:
The worst-case scenario laid out at Thursday’s commission meeting was that any new project could be delayed until the 2009-2010 budget year.
No new road construction in California for six years? This is the kind of thing that happens when 58% of the state budget is “off the table” when cuts need to be made.
The bottom line is that the state spends way too much and Sacramento is asking you to take out a high interest rate cash advance from a new credit card because the old ones are all maxed out.
Enough is enough. It’s time to say “no”.